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In Focus: New-Car Incentives and Rebates for Buyers

Posted on March 4th, 2014

Empty ShowroomWhat do automakers do when sales are slow? They offer incentives to customers. Car manufacturers entice people to visit dealerships and encourage them to make purchases by allowing them to buy their vehicles of choice at a discount. New-car incentives come in several forms. If you will be buying a car soon, you need to familiarize yourself with the offers that will let you purchase a car for less.


Zero percent/Low APR financing

Probably the most well-known incentive is that which involves a low financing rate or none at all. Through their captive finance companies, automakers enable buyers to finance their purchases at a comparatively low rate or free of charge.

Zero percent financing may not be a rare offer, but not everyone can avail of it. Only a select few qualify for this incentive. Usually, shoppers who qualify for this incentive are those with excellent credit. In other times, people need to meet other requirements (like being part of the military) to be eligible.

If you qualify for this incentive, pay attention to the loan term. Low interest rate offers often come with longer loan terms. You may end up paying more with a longer loan despite a low or zero rate, so make the computations before closing the deal.


Customer cash rebate

Also known as bonus cash, customer cash rebate is an incentive given by the automaker to the buyer. Customer cash is typically applied to the vehicle; the amount will be deducted from its purchase price. In other instances, the buyer will pay the vehicle price in full but keep the cash. The money will be sent to the buyer after the sale.

Just like with zero percent/low APR financing, one must meet the automaker’s requirements in order to qualify. Take conquest bonus, for instance: this is only given to buyers whose current vehicle is made by a competing manufacturer, hence the name. More often than not, automakers require the buyer to finance the vehicle through their captive finance companies in order to avail the rebate.


Dealer cash rebate

As the name implies, this incentive is given by automakers to dealers. It is a type of marketing support, an incentive that could push dealers to sell more units. Dealers are not required to pass on the savings to buyers, but they sometimes do.


Advice for Car Buyers

It is a good idea to research about incentives and rebates before heading to the dealership to buy a car. Make it part of your homework when shopping for cars. Find out what incentives automakers are currently offering.

When you already know about the incentives, start contacting dealers. Give them a call or send an email to request for a price quote. When you negotiate for the car price, treat the incentive as something separate. Focus on getting the car for the best price possible first; once you get a price you are happy with, you can bring up the incentive.

If you find out that the vehicle you are eyeing to buy comes with dealer cash, mention it to the salesperson but don’t expect the dealer to offer the savings to you. If anything, use that knowledge to negotiate the price better since the dealer will get paid if you make the purchase.

Photo credit: David Brossard/ Flickr/ CC BY-SA


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